Already, at least 5.6 million to 8 million Americans age 65 and older have a mental-health condition or substance-abuse disorder, the report found, calling it a conservative estimate that does not include a number of disorders.
Mental-health experts welcomed the report.
"This is a wake-up call for many reasons," said Ken Duckworth of the National Alliance on Mental Illness. The coming need for geriatric mental-health care "is quite profound for us as a nation, and something we need to attend to urgently," he said.
When mental-health problems occur in older adults, the report found that they are too often overlooked and tend to be more complex. Among the reasons:
People over 65 almost always have physical health problems at the same time that can mask or distract from the mental-health needs. The physical illnesses, and medications used for them, also can complicate treatment.
Age alters how people's bodies metabolize alcohol and drugs, increasing the risk of dangerous overdoses and substance abuse.
Grief is common in old age as spouses, other relatives, and friends die. It may be difficult to distinguish between grief and major depression.
"There'll never be enough geriatric psychiatrists or geriatric-medicine specialists to take care of this huge wave of people that are aging," Kirwin said.
The Institute of Medicine report recognizes that. It says all health workers who see older patients - including primary-care physicians, nurses, physicians' assistants, and social workers - need some training to recognize the signs of geriatric mental-health problems and provide at least basic care.
To get there, it called for changes in how Medicare and Medicaid pay for mental-health services, stricter licensing requirements for health workers, and for the government to fund appropriate training programs.